PHA's next chapter

The announcement that Physician Hospitals of America Executive Director Molly Sandvig will be working elsewhere next year has some wondering about the fate of the organization she leaves behind and the industry segment it represents.

Sandvig, 37, announced last week that she will start her new job as chief operating officer of Joint Replacement Hospitals of America, a Rancho Mirage, Calif.-based company seeking to develop knee- and hip-replacement facilities, on Jan. 1 or whenever her successor at Physicians Hospitals of America is named and “a positive transition has been made.”

Keri Bolte, PHA's member services manager, has been selected to serve as interim executive director for nine months beginning Dec. 1, while the organization finds a permanent leader.

Word of Sandvig's planned departure came just before the advocacy organization for the physician-owned hospital industry began its 10th annual conference in San Francisco, and it was the topic of much discussion in the corridors of the Hyatt Regency. “She's going to be hard to replace,” said Randy Fenninger, PHA's chief lobbyist. He commended Sandvig for her charisma and skills in building enthusiasm within the group and for her ability to raise money for PHA's operations and political involvement.

According to the PHA's 2008 Internal Revenue Service 990 tax form, the most recent year available, Sandvig drew a base salary of $117,800 and a $40,000 bonus and received $33,100 in nontaxable benefits for a total compensation of $190,900. The organization had total revenue that year of just more than $1.5 million.

There was a hint of dissatisfaction with the PHA under Sandvig's tenure that could be tasted during at least one educational session at the meeting in light of the restrictive provisions affecting physician-owned hospitals in the healthcare reform law.

“When we get a new (executive director), we need to go on the attack,” said Marvin Parks, head of public affairs at 51-bed Arkansas Surgical Hospital in North Little Rock and a speaker at the conference. “We can't just dodge bullets anymore. I felt like we were doing a lot of that.” In Parks' session, he encouraged attendees to donate generously to the PHA's political action committee so it could back opponents of House and Senate Democrats who supported the restrictions on physician-owned hospitals.

Parks said the PHA's strategy under Sandvig was to blend in and not make waves. He acknowledged that the strategy worked for a while and that the PHA was able to fend off restrictions on physician ownership of hospitals for years. But that approach failed in the end with the provisions in the reform law, he said.

Gilbert Baker, an Arkansas state senator and a Republican U.S. Senate candidate, who attended the conference, emphasized PHA's current challenges. “The group's in transition right now,” Baker said. “I think it's important this group be aggressive in promoting the entrepreneurial spirit.”

Two of the main challenges to physician-owned hospitals are contained in the Patient Protection and Affordable Care Act, which places a moratorium on new facilities and prohibits expansion of existing facilities. Some physician-owned hospitals, such as Kentuckiana Medical Center, Clarksville, Ind., are already struggling financially (See story, above).

While Sandvig said she supports Republican victories in upcoming congressional elections, she said the GOP's pledge to repeal the law won't help because President Barack Obama would simply veto their action. “I think the better concept is to see if there's something we can do that fixes the problems and promotes quality.” Sandvig suggests working for legislation in which any hospital in the 75th to 80th percentile of a CMS scoring system would be allowed to expand.

“Physician hospitals are well-positioned to lead in both quality and patient satisfaction,” said Julie Fleck, a nurse and COO of Parkview Ortho Hospital, in Fort Wayne, Ind. The facility is a joint venture between 675-bed Parkview Hospital, Fort Wayne, and physicians. Fleck said her institution underwent a $20 million expansion and remodeling project that didn't finish in time to beat the cap imposed by the reform law. As a result, there is now space for 12 more beds, but those beds can't be added to the hospital's license.

U.S. Rep. Michael Burgess (R-Texas), a proponent of physician-owned hospitals, said a similar situation occurred in his district, near Dallas. The new $53 million Texas Health Presbyterian Hospital Flower Mound is designed for 103 beds and was financed in part by physician investors.

The hospital, which was a citation award winner in the 2010 Modern Healthcare Design Awards, opened in April but was still under construction when the reform law was drafted. Burgess, who is a physician, said “it was tense for the doctor investors” because it appeared that the hospital would not be able to expand beyond the number of beds it had licensed at the time the bill was drafted, “which was zero.” Burgess said the hospital was allowed to proceed as planned eventually.

—with David Burda